Cloud computing represents a major change in how resources of information technology are delivered and consumed and will influence the telecom industry, its future services, business offerings and economics of the telecommunication. New revenues potentials from mediating cloud‐based services are however less discussed, as well as the commonly accepted and completed methodology for this purpose is lacking. The objective of this paper is to clearly identify recommended roles for telecommunication companies (telcos) in the cloud value chain and to present a model for assessing and optimising innovative business opportunities. In particular, we show how the portfolio theory of modern investment science supports risk management in operation of telecom company‐based cloud carriers for service brokering.We recommend a combined broker and carrier role to be a preferred cloud business model for a telco. Such combination is expected to represent the best value proposition for competing against cloud providers and ICT integrators. Further quantitative analysis indicates significant business benefits from differentiating and optimising provision of carrier grade and best effort network connectivity types for a given bundle of cloud services. This implies an efficient use of telco assets and satisfies an increasing demand for network performance in the business market.The novelty of the paper is the developed quantitative optimisation model as well as the analytical identification of the preferred telco role in cloud value network. Practical application of the research may improve dimensioning of technological assets, leading to higher cost efficiency and possibly higher degree of customer satisfaction. Copyright © 2013 John Wiley & Sons, Ltd.

This paper develops models for the analysis of a cloud brokering platform under conditions of risk and demand uncertainty, focusing on controlling the risk of not delivering the quality of service required by users. Such risk can occur as a result of inherent limitations of the best-effort connectivity. We take the approach of modern portfolio theory and show how the trade-off between risk and profit can be chosen by selecting efficient connectivity portfolios that combine the best-effort connectivity of different grades with premium-grade connectivity. We provide theoretical analysis of connectivity portfolio models and related insights delivered by numerical experiments that utilize the measurements of Internet traffic.

We consider the relationship of Internet service providers (ISP) and content service providers (CP) in the Internet ecosystem. Currently the position of ISPs is challenged by the emergence of powerful content service providers, especially with the spreading of bandwidth demanding video services. The further investment in the network capacity may be hindered by prevailing business models that largely exclude the ISPs from sharing in the major cash flows resulting from content provision.We develop modeling tools for evaluation of business models of ISPs and present results of analysis of two models with the potential for generation of additional cash flows for ISP: paid content peering and service differentiation. Firstly, we show that under certain conditions on the cost structure and the level of demand elasticity and uncertainty, it can be profitable for a powerful content provider to resort to paid content peering, thus transferring to the ISP a part of his content provision revenue. The resulting business model may provide substantial benefits to all major participants in this ecosystem: network providers, content and service providers and end users. After this we consider competition in the Internet provision sector and show that also in this case the paid content peering can help ISPs to expand the network capacity and at the same time increase profits of content providers. The end users benefit from the lower prices for content services. Finally, we consider the